Sales and leases of commercial property show no signs of improvement in Palm Beach County and the Treasure Coast, but broker Ed Kearney says the worst may be over for owners.
“No one is in a hurry to sell a building or lease more space, says Kearney, managing partner of Kearney Commercial Realty/Sperry Van Ness. “The economy remains too weak for companies to have the confidence to take a big step.”
Property transactions remain slow for a number of reasons, says Kearney, who has worked in the South Florida and Treasure Coast market for more than 25 years. First, values are low relative to 2006 and 2007 levels. Any owner that bought during those years would be certain to take a loss on a sale now.
“Unless the owner must dispose of the property, he or she will try to hang on and wait for values to improve,” says Kearney of Kearney Commercial Realty. “For that reason alone, it’s unlikely we will see a pick up in transactions before 2011.”
Values have dropped in part because home prices plunged over the past three years, dragging down commercial real estate over fears of an economic collapse in Palm Beach County and all of South Florida. Even without the residential effect, the local recession has lowered occupancy rates, reducing rental revenue and therefore the investment value of office, retail and industrial spaces.
“Unfortunately, there are no signs that occupancy rates at commercial properties will improve this year,” says Kearney of Sperry Van Ness. “Companies are not expanding their payrolls. And businesses will try to hold the line on expenses for as long as possible.”
Those prospects are not a cause for gloom, though, says Kearney of Kearney Commercial Realty. Predictions that commercial real estate would suffer the same foreclosure problems as the residential sector have not come true. Owners and property managers have trimmed expenses in line with revenue to stay on budget and out of bankruptcy.
“Commercial property owners are hanging on for the next upcycle,” said Kearney of Sperry Van Ness. “They are waiting for buyers seeking bargain deals to go away and for true investors to return.”
Realtors say that home prices have stabilized in recent months in Palm Beach County, suggesting that downcycle may be at an end. If that trend continues, office, retail and industrial properties should come out their slump as well, Kearney says.
About Edward Kearney and Sperry Van Ness
Edward Kearney is managing director of Kearney Commercial Realty Inc./Sperry Van Ness with an extensive background in various aspects of commercial real estate including investment analysis, landlord and tenant representation, and property tax abatement. SVN is a leading national brokerage firm that markets commercial real estate properties to an investment and brokerage community of more than 100,000. Kearney welcomes investors, brokers, and others with an interest in the Florida commercial real estate market to contact him today by calling 561-616-6262, or visiting http://www.svnpalmbeach.com for more information about the services he provides.
For more information about Edward Kearney and Kearney Commercial Realty Inc./Sperry Van Ness, please visit http://www.svnpalmbeach.com.
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